1. I SSUE 9 / 2015 HQ A SI A 77
ISYOUR
TALENT
C O V E R S T O R Y
ILLUSTRATION:JAMESBOAST
As the ASEAN Economic Community (AEC) comes into being at
the end of this year, the world’s attention is focused on the ASEAN
opportunity. Since businesses are expanding, organisations’ HR teams
must ramp up their talent practices to support business expansion and
growth in the region. Sunil Puri, Head of Research and Insights at the
Human Capital Leadership Institute (HCLI) and the Editor-in-Chief
of HQ Asia, evaluates the potential impact of ASEAN integration on
local and global enterprises, and highlights five tactics regional HR
teams need to adopt to make their talent strategy AEC-ready
76 HQ A SI A I S SUE 9 / 2015 I SSUE 9 / 2015 HQ A SI A 77
STRATEGY
AEC-READY?

2. 78 HQ A SI A I S SUE 9 / 2015 I SSUE 9 / 2015 HQ A SI A 79
1.SM A LL- AND MEDIUM
ENTER PRISES with single-country
operations, and with a relatively
mature HR functions and talent
management strategies
3.SM A LL- AND MEDIUM-SIZED
ENTER PRISES AND FAMILY-
LOCA L COMPANIES with single
country presence, and with limited
HR maturity and focus on talent
management
4.LARGE R EGIONAL
ORGANISATIONS AND FAMILY-
RUN COMPANIES with pan-
ASEAN presence, and with limited
HR maturity and focus on talent
management
his year may go down in
history as a game-chang-
er for the Association of
Southeast Asian Nations
(ASEAN). As the pace quickens
towards the formation of the AEC
at the end of 2015, the region finds
itself in the global spotlight.
The ASEAN bloc has come a long
way since its formation in 1967. The
combined GDP of the 10 ASEAN
nations (Brunei, Cambodia, Indo-
nesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand
and Vietnam) now amounts to over
US$2 trillion, which would make
it the sixth-largest economy in the
world. Meanwhile, the combined
population of these 10 countries is
over 600 million, accounting for
8.8% of the world’s total popula-
tion. According to Organisation for
Economic Co-operation and Devel-
opment forcasts, regional growth
between 2015 and 2019 is expected
to average 5.6% per annum.
With GDP growth rates poised to
overtake China’s, and a youthful,
growing and increasingly educated
population, the allure of the ASEAN
markets is obvious. In 2015, the
American Chamber of Commerce
surveyed 588 executives at US com-
panies across ASEAN. Around 58%
of respondents said that ASEAN
markets have become more impor-
tant over the past two years, and
66% reported that ASEAN would be
even more important for their com-
panies’ worldwide revenues over the
next two years.
The formation of the AEC is seen
as a step towards creating a regional
economic powerhouse. The AEC
will establish a globally integrated,
competitive single market and pro-
duction base, built on the principles
of equitable economic development
and shared prosperity. “Since we
launched the AEC way back in 2007,
we are trying to look at measures
that we can take to create a single
market and production base that is
competitive, equitable and fully
integrated with the global market,”
explains H.E. Dr Lim Hong Hin, Deputy Secretary-Gen-
eral of ASEAN for the AEC. To establish this, the AEC is
built around five core elements: free flow of goods, ser-
vices, investment, skilled labour and freer flow of capital.
What are the Implications for Regional HR Leaders?
ASEAN’s integration has far-reaching implications on
businesses and their HR teams. Due to increased busi-
ness activity, talent in ASEAN will have more options.
Consequently, industry analysts predict organisations
may find it harder to attract and hold onto their best
talent. This is likely to put pressure on compensation
levels, especially at the mid- to senior-levels.
“In terms of employment and talent development,
AEC formation will open many opportunities for people
to work in other countries, yet stay in a similar culture,”
explains Sabine Schneider, who is responsible for talent
development in Asia at Siemens. ASEAN integration will
also further intensify the war for talent, according to
Jesus M Zulueta, Chairman of ZMG Ward Howell, one of
the top executive search firms in the Philippines. “The
formation of new or additional businesses will create
demand for mobile, aggressive and opportunity-seeking
talent profiles, which will drive up salaries and rewards
in the region,” he says.
The impact of increased ASEAN integration on the tal-
ent landscape will largely depend on individual organ-
isations’ scope and span of operations, and how mature
their HR function is. “I don’t expect any impact on large
enterprises with cross-ASEAN operations and mature
talent strategies,” said Michael Smith, Country Manager
Singapore at Randstad, a global executive search firm.
Smith explains that companies in ASEAN with effective
talent attraction, retention and growth strategies may
not need to change anything in the near term. Zulueta
agrees that increased integration is not an issue for mul-
tinational companies (MNCs) already operating in the
ASEAN. “Cross-border assignments are already happen-
ing either as part of [these MNCs] talent development
programmes or driven by need for specific subject matter
expertise,” he explains. Kimberly-Clark has a similar plan
in place explained Eugene Lam, ASEAN HR Director at
the US consumer goods company. “We have a mobility
framework that facilitates intra-region and inter-region
leadership and talent movements already,” he says. “For
Kimberly-Clark, ASEAN integration is welcome, as it may
open up the availability of consumer goods professionals
in Singapore,” said Lam.
The Impact of the AEC on Talent Management
Those companies most impacted by ASEAN’s regional
integration will be small- and medium-sized enterprises
(SMEs), particularly those with a HR function and
C O V E R S T O R Y
THEIMPACTOFTHEAECONREGIONALTALENTMANAGEMENT
Source: Human Capital Leadership Institute Research, 2015
T
RA
G
1.
HIGH IMPACT
SMEs
RA
G
3.
CRITICAL IMPACT
SMALL- AND
MEDIUM- SIZED
ENTERPRISES
LOCAL
COMPANIES
RA
G
2.
LIMITED IMPACT
WESTERN MNCs
RA
G
4.
HIGH IMPACT
LARGE REGIONAL
ORGANISATIONS
FAMILY
BUSINESSES
REGIONAL(HRMATURITY)
SPAN OF BUSINESS WITHIN ASEAN
No or minimal implications of the AEC on talent management
Limited implications of the AEC on talent management
Serious or critical implications of the AEC on talent management
2.W ESTERN MULTINATIONA L
COMPANIES with pan-ASEAN
operations, and with mature regional
HR functions and talent management
strategies
A
R
G
Talent Attraction:
Attracting the right
people to your business
and being perceived as
an employer of choice
Talent Retention:
Motivating employees
to stay longer in the
organisation, and
perform at their highest
potential
Talent Growth:
Understanding,
managing and
developing the talents
and skills of employees

3. 80 HQ A SI A I S SUE 9 / 2015 I SSUE 9 / 2015 HQ A SI A 81
strategic outlook that is not mature (see graph on previ-
ous page). These SMEs, with a not yet fully developed
HR function and strategic outlook, may lose their talent
to larger enterprises or their talent may not have the
capability to take on regional roles. The other segment
of companies that may feel the brunt of increased talent
movement in ASEAN are large local and family-run en-
terprises that have traditionally not focused on develop-
ing their HR functions. “SMEs and local companies at
the early stages of the talent development process will
have a higher potential to lose talent, and they will need
to get more proactive around their talent interventions,”
said Smith.
However, the AEC is not a ‘doomsday’ scenario for
the SMEs. They will now have access to a wider pool
of talent, which may help them execute regionally.
“SMEs in Singapore and Malaysia can get more execu-
tives from overseas to lead their regional initiatives, as
Singapore and Malaysia are destinations of choice for
senior leaders,” explained Smith.
How Can I Get AEC-Ready?
As businesses plan to expand their operations in ASEAN
in order to leverage the opportunity presented by the
creation of the AEC, there is a greater emphasis on
regional HR departments to assess how the company
will source, train and retain their talent pool. “Heads of
corporate HR and top talent managers will have to take
a holistic view on talent management,” explains Zulueta.
Regional HR managers will have to look closely at
critical parameters, including talent movement across
countries, remuneration in each country around the
region, attitudes towards work-life balance and cultural
differences. Regional HR functions will also need to
understand the needs and aspirations of their employ-
ees across different demographic bases, and be aware of
a variety of factors that may impact employee attraction
and retention. “This means revisiting the company’s
employer brand proposition, how the company attracts
external talents and its talent retention strategies, train-
ing and development programmes and long-term career
development plans,” adds Zulueta.
While SMEs and local organisations need to strength-
en their HR function and think through their talent
attraction, retention, development strategies, MNCs
need to effectively coordinate their HR efforts across
the region. Regional HR teams will have to collaborate
and work closely with country HR teams to create a HR
strategy that is compelling at the country and ASEAN
level. “From my experience, the collaboration of country
HR departments is essential,” says Schneider. Zulueta
concurred, and added that another critical area is estab-
lishing a well-defined corporate culture that takes the
sub-cultures within each country into consideration.
C O V E R S T O R Y
Tactic 1: Strengthen HR-
Business Partnerships
Regional HR managers need to
understand the business impact of
the AEC’s formation. This impact
may depend on the industry, sector,
span and scope of operations of the
organisation, as well as its ASEAN
business strategy. However, certain
sectors, such as manufacturing,
are likely to be more impacted by
ASEAN’s integration when compared
to IT and professional services.
Experts suggest that it is very
difficult to have a blanket policy
for such a diverse region. “There
is no one-size-fits-all,” warns Lim.
“For instance, while manufacturing
companies may want to think
about where they want to base
their assets, organisations specifi-
cally looking at a particular country
should first strengthen their local
talent strategy.”
Regional HR leaders need to
ensure the ASEAN talent agenda
is central to the organisation, and
that HR is an equal stakeholder in
the business strategy development
and planning process. “Regional HR
should ensure they have a voice in
the boardroom,” says Smith.
Tactic 2: Embrace Talent Mobility
According to the Asian Develop-
ment Bank (ADB), the AEC will
generate upwards of 14 million
new jobs between 2015 and 2025,
although these positions are un-
likely to be evenly spread across
the region. The ADB further sug-
gests three main migrant destina-
tions: Malaysia, Singapore and
Thailand, which jointly account for
approximately 90% of the region’s
total migrants and 97% of intra-
ASEAN migrants.
“Since different countries have
different needs in terms of the
level of skills that are required from
workers, and different countries are
at different stages of demographic
growth, fears of an overnight move-
FIVEHRTACTICSTOIMPROVE
AEC-READINESS
RA
G
TALENT
MANAGEMENT
STRENGTHEN HR–BUSINESS
PARTNERSHIPS TO EVALUATE IMPACT
ON TALENT STRATEGIES
EMBRACE TALENT MOBILITY
TO BENEFIT FROM A FLUID TALENT
BASE
REINFORCE REGIONAL EMPLOYEE
VALUE PROPOSITION TO ATTRACT
THE BEST TALENT
DEVELOP A FLEXIBLE COMPENSATION
PHILOSOPHY TO ATTRACT AND
ENGAGE TALENT
INVEST IN GLOBAL LEADERSHIP
DEVELOPMENT TO DEVELOP
REGIONAL TALENT
1
2
3
4
5A: Talent Attraction
R: Talent Retention
G: Talent Growth Source: Human Capital Leadership Institute Research, 2015
“SMES
ANDLOCAL
COMPANIES
ATTHEEARLY
STAGESOF
THETALENT
DEVELOPMENT
PROCESSWILL
HAVEAHIGHER
POTENTIALTO
LOSETALENT”
– MICHAEL SMITH,
COUNTRY MANAGER
SINGAPORE AT
RANDSTAD
ILLUSTRATION:JAMESBOAST
HR functions must
consider all the parts
of ASEAN integration,
from freer flow of
goods, services and
capital, to the easing
of movement for
professional talent

4. 82 HQ A SI A I S SUE 9 / 2015 I SSUE 9 / 2015 HQ A SI A 83
C O V E R S T O R Y
ment of the workforce are likely to
be unfounded,” says Lim.
The AEC will only allow tempo-
rary movement of skilled labour
within the region, although certain
categories of professional work-
ers have been exempted from this,
including engineers, nurses, survey-
ing service providers, architects, ac-
counting service providers, medical
practitioners, dental practitioners
and tourism professionals. However,
these professions account for less
than 2% of the total workforce in
ASEAN. Also, negotiations for these
categories of workers have only been
conducted on a bilateral basis and
not on a region-wide basis.
Regional talent has very specific
career preferences. In a 2013 survey
conducted by Jobstreet.com, one of
Southeast Asia’s largest online job
portals, 80% of respondents said
they would prefer to work in Sin-
gapore under the integrated AEC.
Once the AEC was in place, 67% of
respondents felt they would have
a better opportunity of finding a
better-paid job and 52% intended to
look for a new job. “For employees,
boundaries will be loosened, and
they can work in different countries
more easily, which is a key attraction
and motivation driver, especially for
younger talent,” says Hamidah Na-
ziadin, Group Chief People Officer
and the Head of Group Corporate
Resource at CIMB Bank.
In response to increased labour
movement across ASEAN, organisa-
tions must take a more sophisticated
approach to sourcing and managing
their talent. “Building institutional
capacity through talent mobility
is increasingly becoming a larger
focus within the growth strategies
of international corporations,” says
Shaily Gupta, Southeast Asia Head
of HR at Deloitte. “To leverage the
requisite subject matter expertise,
mobility across ASEAN region is a
must. The current immigration and
travel policies are restrictive and
limit the speed of responce to the
market and customers,” she adds.
Tactic 3: Strengthen Regional EVP
According to professional services firm Towers Watson’s
2014 study on HR trends, a significant number of organ-
isations are missing out on a golden opportunity to at-
tract, engage and retain top talent. Less than half of the
companies surveyed have a long-term plan on how to get
the most from their employee value proposition (EVP);
what an employer expects from its employees and what
the employer provides its employees in return.
Regional HR may want to take ASEAN’s diverse work-
force demographics into account to drive talent attrac-
tion and employee commitment. “Organisations may
want to adopt the 80-20 approach to EVP. While 80% of
the value proposition should be global, 20% should focus
on creating a compelling regional story,” says Smith.
Tactic 4: Develop a Flexible Compensation
Philosophy and Framework
Compensation in ASEAN is on a rapid rise. According
to the 2015 Hays Asia Salary Guide, 43% of employers
across Asia increased salaries in their last employee re-
view by 3 to 6%. A further 21% gave increases of between
6 to 10%, and 8% increased above that.
While organisations are looking at their payroll costs,
they also want to attract the best talent in order to grow
their businesses. Aside from basic salary and bonuses,
flexible benefits may allow regional HR teams to cater to
the diversity of their workforce by offering employees a
wider selection of benefits, while still streamlining costs.
“The compensation structures, levels, local taxations
and statutory requirements impede free talent move-
ment,” says Gupta. “A unified approach or framework
will enable the talent flow across ASEAN countries.”
Salary remains an important factor in attracting
and retaining talent. “Regional HR needs to develop a
long-term focus on employee remuneration to improve
retention rates and increase employee productivity over
time,” advises Smith.
Tactic 5: Invest in Global Leadership Development
Local and global organisations need leaders who can
lead businesses in ASEAN and, more importantly, bring
the ASEAN perspective to global teams. This emerging
cadre of global leaders is, however, in short supply. Ac-
cording to a 2012 survey by McKinsey, just 2% of the
top 200 employees in global companies are located in
Asian emerging markets. Given that these markets are
likely to account for one-third of sales over the next few
years, this is a looming issue for organisations. “Many of
our businesses are acting regionally already and need a
strong support from HR to develop talents who are able
to act and succeed in the region,” says Schneider.
HCLI research suggests that what
separates a great global leader from
a successful in-country leader are
three qualities: the ability to be com-
fortable with discomfort; the ability
to build relationships, both within
and outside the organisation; and
being able to adapt authentically.
Having all three of these qualities
will result in the potential to lead on
a global scale.
In order to create a cadre of
regional leaders, HR needs to take
steps to plug these gaps in local
leaders. “While some of our talents
will relish the prospect of working in
another country, many are reluctant
to leave home unless the package is
extremely attractive,” says Nazia-
din. “Managing and leading in one’s
own country is quite different from
managing or leading in a different
culture or environment.”
Regional HR needs to encourage
leaders to take on global roles,
staff talent on cross-country proj-
ects and creatively market regional
or global roles to local talent. “Mov-
ing to another country will always
push you out of your comfort zone
and into a new learning zone,”
explains Schneider. Gupta concurs:
“ASEAN countries are divided by a
multitude of ethnicities, languages
and religions. Therefore, education
on diversity and inclusion is needed
more than ever to create one com-
mon market for talent.”
Prepare for an
AEC Future, Today
AEC formation is a reality. It will
have a talent impact on most organ-
isations, except those with pan-
ASEAN operations and mature HR
functions. Regional HR departments
must wake up to the fact that even
though the influence of the AEC
may be long term, they need to pre-
pare themselves now. In particular,
regional HR departments must align
their talent attraction, retention and
growth strategies to the new, post-
2015 ASEAN.
BRUNEI 1.46%
PROJECTED ANNUAL GROWTH RATE OF THE
BRUNEI LABOUR FORCE FROM 2015 TO 20201
CAMBODIA 1.1 MILLION
NUMBER OF JOBS THAT THE AEC IS EXPECTED
TO CREATE BY 20252
INDONESIA 1.9 MILLION
NUMBER OF JOBS THAT THE AEC IS EXPECTED
TO CREATE BY 20253
LAOS 19.5%
PERCENTAGE LAO’S GDP COULD EXPAND TO BY
2025, CREATING 130,000 JOB OPPORTUNITIES4
MALAYSIA 10 YEARS
MINIMUM AMOUNT OF EXPERIENCE A FOREIGN
ENGINEER IN MALAYSIA MUST HAVE5
MYANMAR 25%
PERCENTAGE OF STAFF THAT MUST BE LOCAL IN
A FOREIGN- OWNED ENTITY FOR THE COMPANY’S
FIRST TWO YEARS IN MYANMAR6
PHILIPPINES 3.1 MILLION
NUMBER OF JOBS THAT THE AEC IS EXPECTED
TO CREATE7
SINGAPORE 14
NUMBER OF DAYS A SINGAPORE-BASED
EMPLOYER MUST ADVERTISE A VACANCY ON A
SINGAPORE GOVERNMENT JOB PORTAL BEFORE
THEY CAN APPLY FOR A SKILLED FOREIGN
WORKER8
THAILAND 39
NUMBER OF PROTECTED PROFESSIONS IN
WHICH FOREIGNERS ARE NOT, AND WILL NOT BE
POST-AEC, ALLOWED TO WORK IN THAILAND9
VIETNAM 2/3
FRACTION OF THE SIX MILLION NEW JOBS
THE AEC IS EXPECTED TO CREATE THAT ARE
DEFINED AS ‘VULNERABLE’10
WHAT DOES THE AEC MEAN FOR YOU?
“FEARSOFAN
OVERNIGHT
MOVEMENT
OFTHE
WORKFORCE
ARELIKELYTOBE
UNFOUNDED”
– H.E. DR LIM HONG HIN,
DEPUTY SECRETARY-
GENERAL OF ASEAN
FOR THE AEC
Sources:
1. Global Employment
Trends 2014: The Risk
of a Jobless Recovery,
International Labour
Organization
2., 3., 4., 7. 10. ASEAN
Community 2015:
Managing Integration
for Better Jobs and
Shared Prosperity,
Asian Development
Bank and the
International Labour
Organization
5. The Board of
Engineers Malaysia
6. Grant Thornton
Advisory Services,
Myanmar
8. Singapore Ministry of
Manpower
9. Thailand Ministry of
Labour